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What is the effective rate

    Assignment Instructions

    Assignment ID: FG133136215

    Question – BRN Co. plans to borrow P10,000 from MLP Bank at a stated rate of 10% per annum. (Each item is independent with one another).

    Required – What is the effective rate if it has a compensating balance of P2,000, and the cash trapped in the compensating balance earns 2% a year, Brian maintains a minimum transaction balance of P500 in its account?

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